New visitors to Get Rich Slowly are sometimes skeptical. “Do the things you write about actually work?” they ask.

Absolutely they work.

They work financially, but many of them also work psychologically. That last bit may be the most important. I frequently say that money is “more about mind than it is about math”, and I mean it. We all know the basic arithmetic behind money management — it's the psychological stuff that gets in our way.

The techniques I write about are tools. Different tools are appropriate for different situations, for different jobs. And whereas I might use a hammer and a nail to hang a shelf, you might use a screwdriver and a screw. So it is with money. Each of us needs to assemble a toolbox appropriate for our own circumstances, for our own needs.

There are some important things to know when putting together your own personal-finance toolbox.

Not every tool works for every job
Just as it's important to select the proper tools for a home improvement project, you need to choose the correct methods for managing your money.

You would not use a hammer to cut a board. Similarly, your Roth IRA is not the right tool for saving an emergency fund. The “ask for a raise” tool isn't critical if you run your own business. You can't clip coupons to buy a house. (Well, not yet anyhow.)

If you work at minimum wage and have already cut your expenses to the bone, frugality tools are going to be less critical to your success than tools that help you raise your income. When you can no longer reduce your expenses, it's time to take a different approach.

Some tools become less useful over time
Now that my non-mortgage debt has been eliminated, I no longer need the debt-reduction tools I used to employ every day. They're still in my toolbox in case something breaks in the future, but for now I'm working on other projects.

Certain tools are almost always useful, however. Frugality and thrift generally reward those who know how to use them well. Everyone can profit from knowing how to save for the future.

You cannot be an expert with every tool
It's a mistake to believe that every piece of financial advice — every tool in the toolbox — will be applicable to you and to your situation. In fact, I've learned that most individual pieces of personal finance advice aren't useful for me at all! (Many of the techniques I share at GRS don't apply to my life, but I share them anyhow because they may be useful to others.)

Just as I cannot seem to use a real-life reciprocal saw correctly, for example, I'm not good at investing in individual stocks. Instead, I use a different tool: indexed mutual funds. I'm still building my financial future, but I'm doing so with tools I understand and feel comfortable using.

You become skilled with a tool by using it
You cannot strap on a tool belt and expect that you're ready to build a house. Everyone starts with the basics. You build a shelf for your wife. You repair the chair your husband shattered.

So, too, with personal finance. You don't make a million dollars overnight. It takes time to develop wealth-building skills, but you learn them by doing. As you learn, the changes are small and imperceptible, but they're very real.

I've seen the power of small changes in my own life, and I've read similar success stories from Get Rich Slowly readers. Your fantastic responses to yesterday's article about emergency funds are a perfect example. Over 100 commenters explained how emergency funds give them peace of mind or have helped in past times of crisis. An emergency fund is a small but important tool in your personal-finance toolbox. As you use it, you gain skill.

Building your financial future
Financial success takes work. For all but the lucky, wealth is built slowly, one smart choice after another.

Personal-finance knowledge is like a shop, filled with tools and plans and materials. Your aim is to use these things to build a solid financial future. To do so, you must use certain basic tools (saving, investing, etc.), but beyond that you have control over how the final product will look and feel. Do you like frugality? Make that the focus of your project. Hate frugality? Use only a little, but compensate with other tools and resources.

Don't expect perfect results right away. It takes time to build something lasting, and so does building wealth. Financial success requires patience and consistency. The techniques I share do work, but only if your aim is to get rich slowly.

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.

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There are 23 reader responses to "Do the Tools of Personal Finance Actually Work?".

Eric J. Nisallsays

You’ve hit hte nail on the head, JD. Not everyone has the ability to understand every aspect of personal finance. I think the key is to try to learn as much as possible, and ask for help in the other areas. Practice makes perfect; if you do not persistently use the tools you have, you will become less proficient and the benefit will decrease. Many people tend to go gung-ho in the beginning, but as time passes they get a bit complacent and fall into their old habits. At least there are valueable resources like your blog (and hopefully mine as well) to help people keep their focus and provides tips/ideas for keeping on the right path to reach their goals.

I can say this to visitors- “Yes, these tips WORK!” I’ve been following GRS for just over a year. For most of my adult life I kept my head buried in the sand as far as money is concerned. Everything else in my life was under control, but I felt incredible anxiety about money-I couldn’t stand even looking at my bank balance. I just “guesstimated” every purchase, every check written. Every ATM swipe was a crap-shoot.

Now, in large part thanks to JD and GRS, I have an ING savings account with a growing emergency fund and automatic deposit from my checking account. I have paid off my credit card debt. Nearly maxed out my retirement contributions. Joined Mint. I never bounce a check, always have a cushion in my checking account, I have two other savings accounts growing for “other” expenses, and our family has brought our discretionary spending under control.

Now I love to watch our money grow. It’s a slow process, a lot like gardening. I can honestly say that this financial transformation has been a wonderful surprise and a great gift to myself and my family. Although the peace of mind of having a growing emergency fund and a stable financial management system is great, the emotional charge I get from finally taking control and overcoming my old fears is the greatest part of it.

So, yeah, this stuff works. Do yourself a favor and pick up one of the tools that doesn’t look too scary, and go build a shelf. Fix a chair.

I think all pf bloggers recieve the same degree of scepticism by readers who think the concepts are not applicable to their own life. The thing people do not realize is that you can apply any concept to your own life as long as you are willing to. Granted, some people are not able to but the majority of the readers are just not willing.

Saving a couple dollars a day seems like nothing, but it is mid-Nov and when I look back to the start of the year where I started truly applying pf concepts, I realize I have come a long way. I frequently check my savings & investment accounts and realize how much more I have saved this year than any other year. I have done this all while attending school full time. So if I could do it I think that everyone can.

Not to sound argumentative, and I may be misinterpreting your comment, but a person cannot adopt just any concept into their own life/plan. That is the problem with all of the authors who spew their “advice” to the world, it just is not that simple. Even JD stated in this very post (1st bolded topic) and it is an issue I cover in my own blog Financial advice is not a one size fits all proposition
that “not every tool works for every job”. Each person’s/family’s situation is different, requiring analysis and custom tools/advice that applies to that specific situation. It is one of the reasons why in my own business I listen first before making judgements or action plans, because everyone cannot fall under the same umbrella. Each set of circumstances is unique and some concepts just are not prudent or beneficial to all of them.

JD, you were reading my mind yesterday. I was reading the comments about the myriad ways people interpret “emergency fund” and the way its importance varies with income and options, and was wishing you’d write something about how our needs change with our financial stability.

If I’m homeless and have no kitchen, as a poster pointed out last week, then cooking frugally means something different to me than to a family of five scraping by when one parent has lost a job or to a comfortable couple looking to save more for retirement.

If I have no extra income to invest then investment tips don’t help me today, but I might learn something for tomorrow. Similarly, those who don’t feel a need to practice frugality today because they’re doing well can still learn about their options for a time when things might be leaner.

Personal finance is about learning to know yourself and to use the tools that fit with your personality and values so that you ensure a stable financial future for yourself. My path will never be the same as someone else’s and columns like yours address the many ways we can find that stability. Keep up the good work.

Sorry that you took the wrong message from my post. What I meant is that there is a clear difference between not able to apply pf advice and not willing to. Some people are in unique situations where they simply can apply only certain key theories. On the other hand there are others who focus more on excuses than actually getting serious about their finances.

Great article. I deal with clients day after day and they all have different financial needs. I have an aresenal of products and techniques both for debt reduction and investing available. My job is to interpret my clients needs and recommend a solution that fits their life.

If you just read all the financial information available and try to make it work for you, you’ll actually be doing yourself a disservice. You need to determine your priorities and then develop a plan around them using a strategy that you understand. As JD says, there are a lot of tools, pick the one that works for you.

I love the mental image of the tools. The steady, persistent application of the right tools to the right job is the key to success in virtually every endeavor. A house isn’t built overnight (except on Extreme Home Makeover). In the real world, it takes time and the right tools. Just like you said…

“You don’t make a million dollars overnight. It takes time to develop wealth-building skills, but…as you learn, the changes are…very real.”

Smart, consistent, and continual use of proven tools would help us all. Thanks, JD.

Joining the conversation late, I think that I’d like to point out, that us pf bloggers should realize that we can’t reach everyone. My blog isn’t made for everyone. I’m a young, professional, still taking baby-steps toward my financial freedom, so I feel that I’d be most valuable to an audience of the same cut. My tools are for beginners, and I couldn’t possibly expect to add much potency (for now) to a topic covering Roth IRAs, or complicated stock dividends. I’m still at the beginning of my journey, so those tools will be more useful to me (& my readers) later.
I think that it’s foolish, to spat advice to everyone, unless you’re Warren Buffet.

I appreciate the honesty in this entry. I have become resistant to blog entries that go along the lines of “read this and I’ll guarantee you’ll be a millionaire!” I absolutely agree that it’s up to the reader and no blogger should make false promises when everyone’s financial situation is unique. There are universal ideas, like cut back on spending, but where and how is something that can’t be determined for everyone.

I found my biggest problem was not even knowing what I was spending. The most amazing tool I now have is Yodlee, helping me get a easy look at everything that goes out. Getting a hold on spending was crucial to my own financial turnaround.

It’s nice to know what to do with the money you save, but it’s often more trouble getting to the point where you *have* money to invest.

In large part because of GRS and its readers, I/we have learned to carve a path to financial freedom.

Tools we are currently using:

– ING (Small)Emergency Fund
– Debt Snowball
– Gardening! Yes, GRS even inspired me to get started.
– Frugality – Wise use of resources available to us. Most of all, needing less and less as I focus on things that I value. Living below our means.
– “Allowance” for discretionary spending. Ever since we started this, no more going over budget. (Not perfectly but for the most part)
– Spreadsheet to track my spending.
– Quicken for check balancing.
– Also read some recommended books here. TMMO, Your Money or Your Life etc.

#8: The problem with being so sure that someone who is complaining is able to do something about their situation is that you might just be wrong. Even if you can’t use a personal finance tool *right now,* meaning you could potentially use it later, it’s still true you can’t use it right now. And unless you’ve got closed-circuit TV installed in all your blog commenters’ homes, you really don’t know who’s who or which person is in what situation.

It’s like when Minimum Wage went around last year commenting all over the PF blogosphere. Most PF bloggers, if not all of them, were convinced he was malingering. Maybe he was. Or maybe he had so many obstacles in front of him that he wasn’t sure he’d ever be able to overcome enough of them to get ahead. That’s a pretty serious situation to be in–I’d be complaining too. Maybe not precisely like he did it, but he isn’t me and I’m not him.

When offering advice it is sometimes better to do more listening than speaking.

He [and my daughter] have been digging themselves into a hole that gets deeper every month, in spite of all my efforts to pass on some of the things that I have learned about handling money.

I have come to the conclusion that some people just can’t accept the reality of their situation. It’s too bad, because it’s the children that are suffering because their parents can’t seem to get their act together.

Totally agree about the “psychological stuff” when it comes to–not just money stuff–but anything at all. Losing weight is easy: just get on a treadmill for an hour every day and reduce your caloric intake. Simple right? Nope. Good luck DOING that.

The recipes are there, we know them, but enacting them is the tough part. Why? We’re human.

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

General Disclaimer: Get Rich Slowly is an independent website managed by J.D. Roth, who is not a trained financial expert. His knowledge comes from the school of hard knocks. He does his best to provide accurate, useful info, but makes no guarantee that all readers will achieve the same level of success. If you have questions, consult a trained professional.

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